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President Obama's oil politics are changing -- again. He's scraping off his anti-oil war bonnet in advance of the election and taking credit at every campaign whistle-stop for increased U.S. oil and gas production, even though most of the drilling is occurring on private, not federal, land. The reason for Obama's about-face is that the election is shaping up to be close. Since the public largely favors exploiting all of our domestic gas and oil resources, on and off shore, Obama feels he must lip-sync a version "drill, baby, drill."

A few voters might be fooled by the president's rapid lane change, but investors remain unimpressed. His change of tone hasn't affected energy-stock prices. In fact, Obama's energy shape-shifting never has had a measurable impact on investors. On the first trading day following the President's vilification of big oil in his Jan. 25, 2011, State of the Union Address, the
Energy Select SectorXLE 0.4332866063463744%Select Sector SPDR-EnergyU.S.: NYSE Arca78.81
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10799038
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2.464686468646865% Rev. per Employee
N/AMore quote details and news »XLEinYour ValueYour ChangeShort position
SPDR (ticker: XLE) closed at $71.84, up $1.68. On April 17, 2012, following his remarks in the Rose Garden that insinuated shady commodity traders were manipulating petroleum prices, the XLE closed at $69.35, up $1.11 cents.

ONE POLITICAL CHANGE THAT might make a significant difference for the energy sector, however, would be Obama's defeat. Investors who believe that will happen should begin wading into the sector now. Obama might already have lost the White House for failing to deliver his promised turnaround in the economy. Many voters view his stimulus as a flop. They object to the government's rewriting of health-care policy. They perceive Obama to be a job-killer, not a job creator, for backing speculative green-energy ventures run by his supporters and obstructing the creation of tangible jobs by not supporting energy projects like the Keystone Pipeline from Canada and drilling off of our coasts. Many voters were angry about all of this in 2010 and, according to most polls, after two years they remain angry.

Oil and gas executives aren't assuaged by the president's recent public turnabout. His administration in their view remains a costly bottleneck to the exploration and development of new fields off of our coastlines, in Alaska, and on federally owned lands in the west. Obama also wants to hike industry taxes significantly, in part to reduce the pricing advantage of petroleum fuels over renewable energy.

The fossil-fuel crowd complains that the Interior Department's Bureau of Land Management (BLM) permitting process is so slow that it discourages gas and oil development. Some permit reviews take three years, according to the Western Energy Alliance. The BLM, under pressure from the Obama administration, promises to reduce the review time to 60 days or less by May 2013 when a new automated system is in place. Oil and gas drillers say new proposed fracking rules inspired by the Environmental Protection Agency are duplicative of state rules and would increase the time, cost,and risk of drilling for gas on federal lands.

Republican Rep. James Lankford, who chairs a government-oversight subcommittee, protested at a May 31 hearing on fracking that the EPA was becoming an obstacle on the nation's road to energy independence. He said, for instance, that in 2005 the Congress exempted drillers from regulations under the Safe Drinking Water Act -- except when diesel fuel was used as a component of the chemicals used to split shale to extract natural gas.

"The EPA appears to be attempting an end-run around the statute by brazenly redefining diesel fuels to include virtually any petroleum product," Lankford said.

Some of the EPA's rules seem absurd. Last week the American Fuel and Petrochemical Manufacturers filed suit against the agency in the Federal District Court for the District of Columbia, challenging a requirement for refiners to blend gasoline with cellulosic ethanol or pay the EPA a waiver credit. Cellulosic ethanol doesn't yet exist in commercial quantities. Yet the EPA forced refiners pay $6.78 million in waiver fees in 2011 for failing to blend in 6.6 million phantom gallons.

THE INDUSTRY IS INTENT ON MAKING the president's anti-oil record a major campaign issue. Jack Gerard of the American Petroleum Institute, which is based in Washington, D.C., has been travelling around the country to "educate" voters about the costs of Obama's policies. The API never before has waged an election-year issue campaign.

A genuine pro-oil policy, he says, would create 1.4 million new jobs by 2030, raise $800 billion in new tax revenue, and cut dependence on Middle Eastern oil. He likes to talk about high-school grads working on North Dakota's Bakken Field who are making $90,000-per-year or more.

Gerard claims his industry has bipartisan support. When he visited Missouri this month to boost the Keystone Pipeline, which is being delayed by Obama, he was joined onstage by Democratic Gov. Jay Nixon and trade-union representatives. About $1 billion would be spent building a portion of the pipeline through Missouri. When Gerard visited Denver soon after to speak to about 400 businessmen, he was joined onstage by Gov. John Hickenlooper, also a Democrat.

When Barron's recently told one of the president's top economic advisors that the API was waging such a campaign, and being joined by Democrats, the advisor expressed surprise. Hadn't the oil men been listening to President Obama's speeches? Every word, it seems.